blatant misinformation. the annual report does not give any indication of what individual publisher payout is, and a google vip has gone on record as stating that it starts at 50% for many premium publishers. btw, at least 10-20% of any adwords traffic that you buy will be lost to click fraud, which will further lessen the potential profits. you don't appear to understand the difference between arbitrage keyword scams and mfa sites.
Of course you are correct in a majority of the cases that's why arbitrage is not easy. It's difficult to find cheap keywords and get quality traffic for them. But it's clearly not impossible, as people are doing it successfully. By cheaper keywords I'm talking about going after long tail like [specific model number] in brackets... etc. Now this sort of thing is getting harder and harder to do because everyone is doing it. But... yeah. DIG. I should also mention that I don't do arbitrage personally, I think it's way too much work and it feels like gaming the system... BUT I think it's ridiculous that people keep saying you can't do it. Clearly you can do it. People are doing it!
Tbar take my word. It just theory. Market conditions and real life paramters will prevent you from profiting. There is always the edge. if it's too good to be true, then it is.
the most extreme long-tail keyword arbitrage that i can think of is ebay... they have the biggest keyword collection in adwords. i can't see that sort of thing working with an adsense site, but i know that people have used arbitrage successfully with adsense in the past... but it's got to be a lot tougher now than it used to be.